Taipei, Feb. 16 (CNA) Shares in Taiwan closed lower Thursday as profit taking eroded the gains from the previous sessions amid fears of a major pullback after the main board's recent strong showing, dealers said.
Selling focused on large-cap old economy stocks, particularly in the petrochemical and steel sectors, with investors pocketing the gains they had built in recent sessions, dealers said.
Meanwhile, major electronics stocks such as smartphone camera lens supplier Largan Precision Co. (大立光) fell due to selling on the broader market, dealers said.
The weighted index on the Taiwan Stock Exchange (TWSE) closed down 28.51 points, or 0.29 percent, at 9,771.25, after moving between 9,753.16 and 9,869.59. Turnover totaled NT$106.54 billion (US$3.46 billion) during the session.
The market opened up 0.27 percent, breaching 9,800 points, and soon reached the day's high on a knee-jerk reaction to a record high on Wall Street, where Dow Jones Industrial Average closed up 0.53 percent and the S&P 500 index ended 0.54 percent higher amid optimism about U.S. President Donald Trump's mention of an "ambitious" tax cut plan to boost the U.S. economy, dealers said.
But at around 9:30 a.m., selling set in, particularly in the old economy sector, pushing the weighted index into negative territory for the rest of the session, dealers said.
"The local main board had gained significantly in recent sessions amid high liquidity," Concord Securities analyst Kerry Huang said. "It was no surprise that many investors simply wanted to lock in their gains, in particular after the weighted index breached 9,800 points."
In the period Feb. 2-15, the local main board gained 351.81 points, or 3.72 percent, as funds flowed into the country after the Lunar New Year holiday.
"The local equity market remained awash in liquidity," Huang said. "But the recent gains pushed up the market's valuation, prompting some investors to take profit, while foreign institutional investors seemed cautious."
This was evident in the fact that foreign investors cut their long position contracts by a net 7,000 Thursday, Huang said.
Foreign institutional investors bought a net NT$3.33 billion worth of shares on the local main board Thursday, according to TWSE data.
"Raw material stocks such as petrochemical and steel firms, which had been boosted by rising product prices, saw heavier selling today but I think the downturn was largely technical in nature," Huang said.
The petrochemical sector closed down 1.23 percent with Formosa Plastics Corp. (台塑) shedding 2.59 percent to end at NT$94.00, and Nan Ya Plastics Corp. (南亞) losing 2.03 percent to close at NT$77.40.
In the steel sector, which ended down 1.17 percent, Chung Hung Steel Corp. (中鴻) fell 2.76 percent to finish at NT$12.35, and China Steel Corp. (中鋼), the largest steel supplier in Taiwan, fell 1.52 percent to end at NT$25.90.
In the bellwether electronics sector, Largan, a smartphone camera lens supplier to Apple Inc., fell 2.88 percent to close at NT$4,560.00 but remained the most expensive stock on the local market. PC brand Asustek Computer Inc. (華碩) dropped 2.14 percent to end at NT$274.00 amid concerns about a possible decline in its operating margin in the first quarter.
"Technical resistance ahead of 9,800 points remains heavy," Huang said. "The local main board is likely to face more selling before it could see some short term technical support at around 9,700 points."
(By Frances Huang)